Internet appliances took a hit recently when 3Com pulled the plug on its much-hyped Audrey and Kerbango devices. Although some pundits continue to disparage this product category, I expect it will take off once we see products with the right combination of price and feature set.

Audrey brought Internet access to the kitchen-the family center. Web users could look up phone numbers or movie times, check e-mail or order groceries. Audrey was compatible with Palm organizers for easy calendar coordination.

Internet-savvy consumers found these features attractive, but few wanted to pay $500 for them. Similarly, the Kerbango radio was interesting but too expensive for a device that only plays streaming Internet audio.

The competition for these devices is not low-cost PCs. Few people want to squeeze a minitower with a 14-inch monitor into their kitchen, nor do they want to slog through Windows just to access Internet content or music.

There are two ways appliance vendors can improve price/performance. One is to cut prices. For an Internet appliance, however, the biggest cost driver is the large color LCD screen.

These vendors can switch to a smaller screen with limited color depth, but the result is something like Cidco's e-mail terminal. This device sells for $99 but isn't appropriate for viewing Web pages.

The right answer is to go the other way: Build a compelling feature set into a $500 device. Audrey's biggest problem was that it was tethered to a single location. Consumers can't afford to add an Internet appliance to every room.

The solution is to make the expensive LCD panel mobile. Add audio and video capabilities, and you have a winning product. One such product is Sony's Airboard, currently available only in Japan. Airboard is a tablet with a 10.4-inch LCD that offers wireless access to the Web and to a local video source.

Airboard sells for about $1,000, still too pricey for most consumers. But the current industry slowdown is causing rapid declines in LCD prices; by the end of this year, I expect similar products will sell for less than $700.

At that price, Web pads will appeal to early adopters, particularly those that have always-on broadband connections. Just as the ridiculed Newton gave way to the successful Palm Pilot, Audrey will be succeeded by her children.

Linley Gwennap is the founder and Principal Analyst of The Linley Group (www.Linleygroup.Com), A Technology Analysis Firm in Mountain View, Calif.